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ELR/ELRP - ELB Group Limited - Unaudited group interim report and interim cash
dividend declarations for the six months ended 31 December 2010
ELB GROUP LIMITED
Incorporated in the Republic of South Africa
Registration number 1930/002553/06
Share codes: ELR & ELRP
ISIN: ZAE000035101 & ZAE000035333
(`ELB`, `the Company` or `the Group`)
UNAUDITED GROUP INTERIM REPORT AND INTERIM CASH DIVIDEND DECLARATIONS FOR THE
SIX MONTHS ENDED 31 DECEMBER 2010
COMMENTS
INTRODUCTION
The ELB Group is a total solutions provider to the mining, minerals, power,
port, construction and industrial sectors in the field of materials handling and
appropriate process plants. This is achieved through ELB generated innovation
and the supply with world class partners of equipment and technology. The Group
operates in Africa and Australasia.
FINANCIAL RESULTS
The 39 percent increase in turnover for the period from R554,6 million in 2009
to R771,8 million in 2010 reflects the improved demand across the full range of
products and services offered by ELB. There is no consistent correlation
between turnover and profit in accounting periods.
The net asset value (NAV) per share attributable to ordinary shareholders
increased by 11,0 percent from 1 286 cents per share at 30 June 2010 to 1 427
cents per share at 31 December 2010.
Headline earnings for the period of R34,9 million (2009 - R12,8 million)
represents an increase of 173 percent.
Attracting and retaining key executives remains a high priority for the ELB
Group. To that end some 2,9 million new options were offered to key executives
in terms of a new, recently approved, share option scheme. An abnormal cost is
reported for the period of R7,1 million (2009 - R1,6 million) in respect of
options granted. Although this charge had a 24,3 cents per share (2009 - 5,1
cents per share) effect on headline earnings it had no effect on NAV.
OPERATIONS
Africa
During the period the mining sector saw an improvement in activity levels. This
had an impact on sales for the period as well as the prospects for a number of
new mining related projects.
The value of projects on hand currently stands at approximately R1,6 billion and
these projects are predominantly in South Africa, Mozambique, Zambia, Angola,
Ghana and Sierra Leone.
The group is launching the M-Range range of modular process equipment which
includes process, crushing, screening and conveying equipment for the mining,
quarrying, recycling and industrial sectors. This will give ELB access to
significant markets previously not comprehensively serviced by ELB.
The Group continues to add suitable technology partners to its portfolio, on an
ongoing basis.
Terex Inc has recently re-established ELB as the distributor of various products
sold to the construction sector.
The construction sector however remains weak and could take some time before
activity levels return to normal.
During the period ELB completed a new service centre in Boksburg effectively
doubling its capacity in Boksburg to service the growing base of ELB equipment
in the market. A property was also acquired in Durban the upgrade of which is
nearing completion and to which our Durban operation has already relocated.
A major new service centre is presently being developed in Middelburg and to
which the branch plans to relocate in the second half of 2011.
This completes the current upgrade programme of the service centres which are
located in all the major centres in which we operate namely Boksburg, Durban,
Cape Town, Kathu, George, Kimberley, Wolmaranstad, Brits and Middelburg
Australasia
The Ditch Witch business recently acquired the right to distribute the Komptech
range of equipment which focuses on treating green waste material. Komptech has
started to contribute positively to Ditch Witch`s bottom line.
With the increase in the size of the business it has become necessary for Ditch
Witch to develop a new head office / service centre on the outskirts of Sydney
and which is due for occupation in the second half of 2011. This will enable
Ditch Witch to better service the growing demand for its Ditch Witch and
Komptech range of products.
Ditch Witch has also recently acquired the right to distribute the Ditch Witch
and Komptech range of products in New Zealand and should commence trading in New
Zealand shortly.
Ditch Witch is now well positioned to participate in the roll out in both
Australia and New Zealand of a major programme to run fibre optic cable
throughout both countries.
CASH FLOW
Cash flow management remains a high priority for the Group.
ELB works closely with bankers, suppliers and customers to ensure we continue to
retain a strong balance sheet at all times.
PROSPECTS
The global resources and power industry sectors are showing signs of potentially
higher activity levels both in Africa and Australasia.
ELB is well positioned to take advantage of any improvement in trading
conditions.
BOARD OF DIRECTORS
Mr Ian Thomson joined the ELB board as an independent director on 28 September
2010, and has been appointed chairman of the audit committee.
DIVIDENDS
ELB will retain its current conservative approach to dividend distribution until
the service centre upgrades are completed and which are currently being funded
largely from internal cash flow. Thereafter consideration will be given to
reducing the dividend cover.
It has been decided to declare an interim dividend of 15 cents (2009 - 12 cents)
per ordinary share.
ACCOUNTING POLICIES
The unaudited interim financial statements have been prepared in accordance with
International Accounting Standard (IAS) 34: Interim Financial Reporting.
Accounting policies accord with International Financial Reporting Standards
(IFRS) and are consistent with those applied in the financial year ended 30 June
2010. There were no new or revised standards, effective for the first time in
the reporting period, which had an effect on the accounting policies or
reporting of the Group.
The interim financial statements also comply with the South African Companies
Act.
On behalf of the Board
AG Fletcher Boksburg
Chairman 15 March 2011
GROUP BALANCE SHEET
Unaudited Unaudited Audited
31 Dec 10 31 Dec 09 30 Jun 10
R 000 R 000 R 000
ASSETS
Non current assets 94 692 69 698 80 033
Property, plant and equipment 78 205 47 408 62 158
Non current loan receivable 3 951 3 444 3 951
Deferred income tax assets 12 536 18 846 13 924
Current assets 953 799 691 583 875 153
Inventories and construction 330 895 312 224 312 028
contract work not yet billed
Receivables and other current 92 210 127 547 202 075
assets
Income tax refundable 6 820 6 498 8 905
Cash and cash equivalents 523 874 245 314 352 145
Total assets 1 048 491 761 281 955 186
EQUITY AND LIABILITIES
Equity attributable to ordinary 353 373 293 579 318 334
shareholders of ELB
Issued capital 25 192 25 192 25 192
Treasury shares (54 939) (41 033) (55 123)
Reserves 19 759 5 586 13 580
Retained earnings 363 361 303 834 334 685
Preference shares 8 8 8
Total equity attribubutable to 353 381 293 587 318 342
equity holders of ELB
Non controlling interests in 42 801 30 219 35 738
subsidiaries
Total equity 396 182 323 806 354 080
Non current liabilities 19 022 16 608 21 582
Interest bearing borrowings 8 509 5 030 10 543
Provision for trade back 9 309 10 694 10 097
commitments
Deferred income tax liabilities 1 204 884 942
Current liabilities 633 287 420 867 579 524
Non interest bearing payables and 522 626 346 961 479 911
other current liabilities
Interest bearing payables 108 517 72 646 99 075
Income tax payable 2 144 1 260 538
Total equity and liabilities 1 048 491 761 281 955 186
Ordinary shares in issue (000`s) 33 860 33 860 33 860
Deduct: Treasury shares in issue 9 094 7 842 9 114
(000`s)
Ordinary shares in issue on which 24 766 26 018 24 746
net asset value per ordinary share
is calculated
Net asset value per ordinary share 1 427 1 128 1 286
(cents)
GROUP INCOME STATEMENT
Unaudited Unaudited Audited
Six months Six months Year
Ended ended ended
31 Dec 10 31 Dec 09 30 Jun 10
R000 R000 R000
Sales 771 809 554 629 1 241 323
Operating costs excluding (705 872) (529 783) (1 154 235)
depreciation and fair value
adjustments to property, plant and
equipment
Operating profit before 65 937 24 846 87 088
depreciation and fair value
adjustments to property, plant and
equipment
Depreciation and fair value (3 256) (2 284) (4 837)
adjustments to property, plant and
equipment
Profit from operations before 62 681 22 562 82 251
abnormal item
Abnormal item
Equity settled share options (7 065) (1 617) (3 178)
expense
Profit from operations 55 616 20 945 79 073
Profit on realisation of non - - 3 609
current assets held for sale
Finance income 9 916 5 176 11 894
Finance expenses (3 735) (3 258) (5 162)
Profit before income tax 61 797 22 863 89 414
Income tax expense (21 323) (8 256) (26 974)
Profit for the period 40 474 14 607 62 440
Profit for the period attributable
to:
Ordinary shareholders of ELB 34 742 12 974 54 789
Non controlling interests in 5 732 1 633 7 651
subsidiaries
40 474 14 607 62 440
CALCULATION OF GROUP HEADLINE EARNINGS
Unaudited Unaudited Audited
Six months Six months Year
Ended ended ended
31 Dec 10 31 Dec 09 30 Jun 10
R 000 R 000 R 000
Profit attributable to ordinary 34 742 12 974 54 789
shareholders of ELB, from the
income statement
Deduct: Items excluded from ( 119) 181 3 747
headline earnings as detailed
below:
Plant and equipment:
Items included in profit from
operations:
Profit on disposal 301 302 225
Fair value adjustments ( 489) - -
Profit on realisation of non - - 3 609
current assets held for sale
Income tax effect of items excluded 48 ( 89) ( 63)
from headline earnings
Non controlling interests in items 21 ( 32) ( 24)
excluded from headline earnings
Headline earnings 34 861 12 793 51 042
Weighted average number of ordinary 24 755 26 733 26 101
shares (excluding treasury shares)
on which basic earnings per
ordinary share are based (000`s)
Earnings per ordinary share (cents)
- basic 140.3 48.5 209.9
- diluted 140.0 48.5 209.9
Headline earnings per ordinary
share (cents)
- basic 140.8 47.9 195.6
- diluted 140.5 47.9 195.6
Dividends declared for the period 15 12 42
per ordinary share (cents)
GROUP STATEMENT OF COMPREHENSIVE INCOME
Unaudited Unaudited Audited
Six months Six months Year
Ended ended ended
31 Dec 10 31 Dec 09 30 Jun 10
R 000 R 000 R 000
Profit for the period from the 40 474 14 607 62 440
income statement
Other comprehensive income 1 808 3 894 2 330
Foreign currency translation
adjustments for foreign operations
Adjustments 1 808 3 894 2 330
Income tax effect - - -
Total comprehensive income for the 42 282 18 501 64 770
period
Total comprehensive income for the
period attributable to:
Ordinary shareholders of ELB 36 279 16 284 56 769
Non controlling interests in 6 003 2 217 8 001
subsidiaries
42 282 18 501 64 770
GROUP STATEMENT OF CHANGES IN EQUITY
Attributable to ordinary shareholders of ELB
Issued Treasury Retained
capital shares Reserves earnings Total
R 000 R 000 R 000 R 000 R 000
Balance at 30 June 25 192 (31 161) 902 296 263 291 196
2009
Total comprehensive 1 980 54 789 56 769
income for the year
Profit for the year 54 789 54 789
Other comprehensive
income
Foreign currency
translation
adjustments for
foreign entities
Adjustments 1 980 1 980
Income tax effect - -
Ordinary dividends (8 371) (8 371)
paid
Increase in share 2 702 2 702
options reserve
Redundant items in the 7 996 (7 996) -
foreign currency
translation reserve
transferred to
retained earnings
Increase in treasury (23 962) (23 962)
shares held by the
share trusts
Balance at 30 June 25 192 (55 123) 13 580 334 685 318 334
2010
Total comprehensive 1 537 34 742 36 279
income for the six
months
Profit for the six 34 742 34 742
months
Other comprehensive
income
Foreign currency
translation
adjustments for
foreign entities
Adjustments 1 537 1 537
Income tax effect - -
Ordinary dividend paid (7 429) (7 429)
Transfer to share 6 005 6 005
options reserve
Redundant items in the (1 363) 1 363 -
foreign currency
translation reserve
transferred to
retained earnings
Decrease in treasury 184 184
shares held by the
share trusts
Balance at 31 December 25 192 (54 939) 19 759 363 361 353 373
2010
Balance at 30 June 25 192 (31 161) 902 296 263 291 196
2009
Total comprehensive 3 310 12 974 16 284
income for the six
months
Profit for the six 12 974 12 974
months
Other comprehensive
income
Foreign currency
translation
adjustments for
foreign entities
Adjustments 3 310 3 310
Income tax effect - -
Ordinary dividend paid (5 403) (5 403)
Transfer to share 1 374 1 374
options reserve
Increase in treasury (9 872) (9 872)
shares held by the
share trusts
Balance at 31 December 25 192 (41 033) 5 586 303 834 293 579
2009
GROUP STATEMENT OF CHANGES IN
EQUITY continued
Attributable Preferenc Non Unaudited
to ordinary e shares controlling Total
shareholders interests in equity
of ELB subsidiaries
Total
R 000 R 000 R 000 R 000
Balance at 30 June 291 196 8 27 759 318 963
2009
Total comprehensive 56 769 8 001 64 770
income for the year
Profit for the year 54 789 7 651 62 440
Other comprehensive
income
Foreign currency
translation
adjustments for
foreign entities
Adjustments 1 980 350 2 330
Income tax effect - - -
Ordinary dividends (8 371) ( 498) (8 869)
paid
Increase in share 2 702 476 3 178
options reserve
Redundant items in the - - -
foreign currency
translation reserve
transferred to
retained earnings
Increase in treasury (23 962) (23 962)
shares held by the
share trusts
Balance at 30 June 318 334 8 35 738 354 080
2010
Total comprehensive 36 279 6 003 42 282
income for the six
months
Profit for the six 34 742 5 732 40 474
months
Other comprehensive
income
Foreign currency
translation
adjustments for
foreign entities
Adjustments 1 537 271 1 808
Income tax effect - - -
Ordinary dividend paid (7 429) - (7 429)
Transfer to share 6 005 1 060 7 065
options reserve
Redundant items in the - - -
foreign currency
translation reserve
transferred to
retained earnings
Decrease in treasury 184 184
shares held by the
share trusts
Balance at 31 December 353 373 8 42 801 396 182
2010
Balance at 30 June 291 196 8 27 759 318 963
2009
Total comprehensive 16 284 2 217 18 501
income for the six
months
Profit for the six 12 974 1 633 14 607
months
Other comprehensive
income
Foreign currency
translation
adjustments for
foreign entities
Adjustments 3 310 584 3 894
Income tax effect - - -
Ordinary dividend paid (5 403) - (5 403)
Transfer to share 1 374 243 1 617
options reserve
Increase in treasury (9 872) (9 872)
shares held by the
share trusts
Balance at 31 December 293 579 8 30 219 323 806
2009
GROUP CASH FLOW STATEMENT
Unaudited Unaudited Audited
Six months Six months Year
Ended ended ended
31 Dec 10 31 Dec 09 30 Jun 10
R 000 R 000 R 000
Cash inflow / (outflow) from 203 870 (16 447) 113 483
operating activities before
dividends paid
Dividends paid (7 429) (5 403) (8 869)
Cash inflow / (outflow) from 196 441 (21 850) 104 614
operating activities
Cash outflow from investment (18 855) (9 773) (27 061)
activities
Cash outflow from financing (1 963) (12 688) (21 549)
activities
Cash inflow / (outflow) for the 175 623 (44 311) 56 004
period
Foreign currency translation and (3 894) ( 664) 5 852
exchange adjustments to cash and
cash equivalents
Increase / (decrease) in cash and 171 729 (44 975) 61 856
cash equivalents
Cash and cash equivalents at the 352 145 290 289 290 289
beginning of the period
Cash and cash equivalents at the 523 874 245 314 352 145
end of the period
Reconciliation to the balance sheet
Current assets - cash and cash 523 874 245 314 352 145
equivalents
NOTES
Capital expenditure commitments
At 31 December 2010 there were
capital expenditure commitments of R
25 314 000 (31 December 2009 - R 18
521 000, 30 June 2010 - R 10 724
000). The commitments comprise R 1
443 000 for additions and
improvements to existing property; R
15 000 000 for additions and
improvements to a newly acquired
property; R 8 833 000 for the
purchase of an additional property,
on which a deposit of R 972 000 had
been paid by 31 December 2010; and R
38 000 for equipment. The capital
expenditure commitments will be
financed from the Group`s existing
cash and cash equivalents, out of
which a deposit of R 972 000, as
mentioned above, had been made by 31
December 2010. The purchase of the
additional property was completed in
January 2011.
Since 31 December 2010 further
commitments of R 10 114 000 have
been made for additions and
improvements to the property
acquired in January 2011, to be
financed from the Group`s cash and
cash equivalents.
Contingent liabilities
A Group entity has issued a
guarantee of R 830 000 in favour of
a raw material supplier to a company
which was previously part of the
Group and has now been sold. The
guarantee is cancellable by three
calendar months notice. A financial
guarantee liability with a carrying
amount of R 80 000 at 31 December
2010 has been accrued in respect of
the guarantee.
ELB Engineering Services operates in
the engineering contracting business
and is exposed to the risks
associated with engineering
contracts. These risks are managed
on the basis of limited liability.
All known liabilities of the group
have been accrued. A contractual
dispute exists which the directors
believe will be unlikely to result
in a material loss.
SEGMENT ANALYSIS
Eliminate
Africa Australasia inter
Total operations operations company
R 000 R 000 R 000 R 000
Unaudited
Six months ended 31
December 2010
Sales 771 809 683 948 87 861 -
Profit for the period 40 474 32 023 8 451 -
Headline earnings 34 861 27 807 7 054 -
Assets 1 048 491 911 034 137 457 -
Liabilities 652 309 620 447 31 862 -
Unaudited
Six months ended 31
December 2009
Sales 554 629 506 511 48 118 -
Profit for the period 14 607 13 261 1 346 -
Headline earnings 12 793 11 785 1 008 -
Assets 761 281 653 411 111 154 (3 284)
Liabilities 437 475 426 362 14 397 (3 284)
Audited
Year ended 30 June 2010
Sales 1 241 323 1 131 657 109 666 -
Profit for the year 62 440 57 667 4 773 -
Headline earnings 51 042 46 985 4 057 -
Assets 955 186 830 115 145 207 (20 136)
Liabilities 601 106 591 507 29 735 (20 136)
INTERIM CASH DIVIDEND DECLARATIONS
The directors have declared the
following interim cash dividends for
the six months ended 31 December
2010.
PREFERENCE DIVIDEND NUMBER 120
An interim cash dividend has been
declared at the rate of 6% per annum
for the first six month period on
the 6% fixed cumulative redeemable
preference shares of R2 each,
equivalent to 6 cents per preference
share.
ORDINARY DIVIDEND NUMBER 126
An interim cash dividend of 15 cents
per share has been declared on the
ordinary shares.
The salient dates in respect of both
dividends are:
Last day to trade cum dividend Friday, 27 May 2011
Shares commence trading ex dividend Monday, 30 May 2011
Record date Friday, 3 June 2011
Date of payment Monday, 6 June 2011
Share certificates may not be
dematerialised or rematerialised
between Monday, 30 May 2011, and
Friday, 3 June 2011, both dates
inclusive.
By order of the Board
DG Jones Boksburg
Company secretary 15 March 2011
REGISTERED OFFICE SHARE TRANSFER SPONSOR
SECRETARIES
ELB Equipment Limited Computershare Investor Rand Merchant Bank (a
14 Atlas Road Services (Pty) Limited division of FirstRand
Anderbolt 70 Marshall Street Bank Limited)
Boksburg Johannesburg 1 Merchant Place
1459 2001 cnr Fredman Drive &
(PO Box 61051, Rivonia Road
Marshalltown, 2107) Sandton
2196
WEBSITE
www.elb.co.za
DIRECTORS
AG Fletcher (chairman) PJ Blunden
(chief executive - ELB Equipment)
T de Bruyn* Dr JP Herselman* Dr
SJ Meijers (chief executive - ELB
Engineering Services) MV Ramollo
IAR Thomson*
*Non executive
Date: 16/03/2011 07:05:02 Supplied by www.sharenet.co.za
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